Senate Backs Lifting Of Cap For Credit Cards

Rates Could Rise To 21 Percent

Senate Backs Lifting Cap For Credit Cards

The state Senate got past some election-year jitters Wednesday and voted 25-11 for legislation that would have consumers paying higher interest rates on many store credit cards as soon as Oct. 1.

Debate took all of three minutes, just enough time for the sponsors to explain the bill. No one spoke against it.

But the lack of debate did not mean the vote was easy.

Sen. Steven C. Casey, D-Bristol, a co-chairman of the banks committee, said that if there had been any serious opposition, he was prepared to send the bill back to committee and kill it.

The reason is that a vote for higher interest rates is potentially embarrassing in an election year. The bill was going to pass quickly and quietly, or not at all, Casey acknowledged.

"This is something that attracts criticism. There's no two ways about it," he said. "We don't want anybody to go out on a limb if it's not going to pass."

The bill now goes to the House of Representatives, where Casey estimated that 90 of the 150 House members will vote for it.

The legislation would eliminate the 18 percent limit on the rate stores can charge on their credit cards. If it becomes law, many national retailers are expected to increase their rates from 18 percent to 21 percent -- the rate they generally charge in states with no limits.

Proponents contend deregulation is necessary to protect local retailers, who say they are losing money on credit operations, and to remove an incentive for avoiding the limit by transferring credit operations to other states.

Casey said 300 jobs are at stake, about half of them at G. Fox & Co. in downtown Hartford.

While there were no questions on the Senate floor, there were plenty when the Senate Democrats held a caucus before the session. Their caucuses, which generally are open to the press, often are a substitute for debate in the Senate.

"Is there any danger we're going to go out there for a party-line vote?" asked Senate Majority Leader Cornelius P. O'Leary, D-Windsor Locks, obviously concerned that the GOP might be

looking for a campaign issue.

Casey told him that Sen. Edward W. Munster of Haddam, the ranking Republican on the banks committee, assured him that only two of the 16 Republicans were planning to vote no.

"I told Munster that if there's a firestorm, that's it," Casey said.

Sen. Charles H. Allen III, D-New Haven, told Casey he probably would vote against the bill, especially if Casey did not need him to ensure passage. He called the vote "dangerous."

Casey said deregulation could mean easier credit for poorer residents, reasoning that higher interest rates would cover the defaults that are likely when credit is offered to a poorer clientele.

Allen seemed dubious. He said store employees always seem to skip him and people who look like him when they try to sign up customers for store credit plans. Allen is black.

Could the merchants promise specifically deregulation would mean easier credit for minorities? he asked.

"You want the promise of hard numbers, we'll talk to them," Casey said of the merchants' lobbyists, who waited outside the caucus room.

Allen spoke to them and did not feel reassured. He voted no.

Others opposing the bill were Democrats William A. DiBella of Hartford, O'Leary, A. Cynthia Matthews of Wethersfield, Anthony V. Avallone of New Haven, Steven Spellman of Stonington, James H. Maloney of Danbury and Marie A. Herbst of Vernon. Republicans Stephen R. Somma of Waterbury, James T. Fleming of Simsbury and Philip S. Robertson of Cheshire also voted no